Lian Li Construction & Lian Yong Advertising

1315th Commissioners' Meeting (2017)

Case:

Lian Li Construction and Lian Yong Advertising violated the Fair Trade Law by posting false advertisements for the "Lain Shang Hu Aesthetics" housing project

Keyword(s):

Housing project, hotel land, the Urban Planning Act, false advertising

Reference:

Fair Trade Commission Decision of January 18, 2017 (the 1315th Commissioners' Meeting); Disposition Kung Ch'u Tzu No. 106005

Industry:

Real Estate Development Activities (6700), Real Estate Agencies Activities (6812)

Relevant Law(s):

Article 21(1) of the Fair Trade Law

Summary:

1. The FTC received complaints from a number of private citizens who had purchased the units of the "Lian ShangHu Aesthetics Phase 1" housing project (hereinafter referred to as the housing project in question) built and advertised by Lian Li Construction Co., Ltd. (hereinafter referred to as Lian Li Construction) as "lightweight mansions," yet they were later notified by the Public Works Bureau of Kaohsiung City Government in May 2016 that the housing project had been constructed in an area defined as hotel land according to the urban planning design of Kaohsiung City and was in violation of the Urban Planning Act. Therefore, they thought Lian Li Construction had violated Article 21 of the Fair Trade Law.
2. Findings of the FTC after investigation:
   The advertisements for the housing project in question included the related information on Lian Li Construction's website and on advertising flyers distributed. The housing project in question was claimed as "fashionable and tasteful residences built for comfort," "the most beautiful and fashionable lightweight mansions around the Cheng Ching Lake," "the delicate 2-room layout?? a warm hotel-like home to belong to you," "clean and simple design, a hotel-like home where you can be at ease," "every bathroom has a window?? a fashionable hotel-like home to provide you with comfort" and "clean water, living water system to provide water supply for all the units." There were also pictures showing different decorated quarters with furniture and facilities just like regular homes. The project particularly featured "leisure (recreation): Cheng Ching Lake Golf Course; daily life functions: Wenshan and Cheng Ching Road shopping area, Chang Gung Hospital, school district including Wenshan Senior High School, Wende Elementary School and Niaosong Elementary School." The contents gave consumers the impression that the housing project was for residential purposes. However, according to the Kaohsiung City Government, the housing project in question was located in an area defined as land for hotels in the urban planning design and could only be used for "hotels and affiliated hotel facilities and facilities approved by the tourism authority of the city. Violations of the aforesaid regulation would be dealt with in accordance with Article 79 of the Urban Planning Act.
3. Grounds for disposition:
   (1) Lian Li Construction and the marketing agent Lian Yong Advertising Co., Ltd. (hereinafter referred to as Lian Yong Advertising) repeatedly contested the wording of "Zoning: hotel zone" had been clearly indicated on the flyers and the website and the term "hotel-like home" was adopted. However, the term "hotel-like home" did not suggest the housing project in question could be used for residential purposes. Whether the position and content of the wording of "zoning: hotel zone' on the flyers were easily identifiable, an advertisement had to be viewed for the overall message to be conveyed and not to be interpreted only according to any specific part of the content. Moreover, advertising was to attract unspecific parties before transactions were concluded. It is true that consumers thus attracted by advertisement to contact the advertiser would negotiate before (during) transaction and sign contract while there would be different factors involved during the while process. Despite that trading counterparts had been informed of the project in question being in a "hotel zone," the advertisements were still false. For this reason, the claim in the advertisements from Lian Li Construction and Lian Yong Advertising saying that the housing units in a hotel zone could be used as residences and the pictures showing decorated quarters and facilities like those in regular homes were a false and misleading representation with regard to use of product and could affect transaction decision in violation of Article 21(1) of the Fair Trade Law.
   (2) After assessing the motive and objective of Lian Li Construction and Lian Yong Advertising for the unlawful act, the illegitimate profit expected, the level of harm of the unlawful act to trading order and the duration, the profit thus gained, the business scale, management condition and market status of the offenders, whether the offenders had been corrected or warned by the central competent authority for similar violations, the types and number of times and intervals of past violations and the punishments received, the level of remorse, the evidences provided and cooperativeness throughout the investigation, and other factors, the FTC cited the first section of Article 42 of the Fair Trade Law and imposed administrative fines of NT$800,000 on NT$200,000 on Lian Li Construction and Lian Yong Advertising respectively.